Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-57586 October 8, 1986

AQUILINO RIVERA, ISAMU AKASAKO and FUJIYAMA HOTEL & RESTAURANT,

INC., petitioners,
vs.
THE HON. ALFREDO C. FLORENDO, as Judge of the Court of First Instance of Manila (Branch
XXXVI), LOURDES JUREIDINI and MILAGROS TSUCHIYA, respondents.

Bobby P. Yuseco for petitioners.

Arthur Canlas for private respondents.

PARAS, J.:

This is a petition for certiorari and prohibition with preliminary injunction seeking the annulment of the
following Orders of the then Court of First Instance of Manila, Branch XXXVI: (a) Order dated June
5, 1981 directing the issuance of a writ of preliminary mandatory injunction requiring petitioners
Fujiyama Hotel & Restaurant, Inc., Isamu Akasako and Aquilino Rivera to allow respondents
Lourdes Jureidini and Milagros Tsuchiya to manage the corporate property upon filing of a bond in
the amount of P30,000.00 (Rollo, pp. 43-57) and (b) Order dated July 24, 1981 denying petitioners'
motion for reconsideration and motion to dismiss for lack of jurisdiction but increasing the bond to
P120,000.00 (Rollo, p. 81).

Petitioner corporation was organized and register under Philippine laws with a capital stock of
P1,000,000.00 divided into 10,000 shares of P100.00 par value each by the herein petitioner Rivera
and four (4) other incorporators. Sometime thereafter petitioner Rivera increased his subscription
from the original 1,250 to a total of 4899 shares (Rollo, p. 4).

Subsequently, Isamu Akasako, a Japanese national and co-petitioner who is allegedly the real
owner of the shares of stock in the name of petitioner Aquilino Rivera, sold 2550 shares of the same
to private respondent Milagros Tsuchiya for a consideration of P440,000.00 with the assurance that
Milagros Tsuchiya will be made the President and Lourdes Jureidini a director after the purchase.
Aquilino Rivera who was in Japan also assured private respondents by overseas call that he will sign
the stock certificates because Isamu Akasako is the real owner. However, after the sale was
consummated and the consideration was paid with a receipt of payment therefor shown, Aquilino
Rivera refused to make the indorsement unless he is also paid. (Rollo, pp. 51-52).

It also appears that the other incorporators sold their shares to both respondent Jureidini and
Tsuchiya such that both respondents became the owners of a total of 3300 shares or the majority
out of 5,649 outstanding subscribed shares of the corporation (Rollo, pp. 4-5), and that there was no
dispute as to the legality of the transfer of the stock certificate Exhibits "B-1" to "B-4" to Jureidini, all
of which bear the signatures of the president and the secretary as required by the Corporation Law
with the proper indorsements of the respective owners appearing thereon. Exhibits "B-1" to "B-4" are
specifically indorsed to her while Exhibits "B-2" and "B-3" are indorsed in blank. Aquilino Rivera
admitted the genuineness of an the signatures of the officers of the corporation and of an the
indorsee therein. (Order dated June 5, 1981, Civil Case No. 13273, Rollo, pp. 51-53).

Nonetheless, private respondents attempted several times to register their stock certificates with the
corporation but the latter refused to register the same. (Ibid., Rollo, pp. 54-55). Thus, private
respondents filed a special civil action for mandamus and damages with preliminary mandatory
injunction and/or receivership naming herein petitioners as respondents, docketed as Special Civil
Action No. 13273, "Lourdes Jureidini, et al. v. Fujiyama Hotel et al." of the Court of First Instance of
Manila, Branch XXXVI presided by respondent Judge. Petitioners' counsel Atty. Marcelino A. Bueno,
upon receipt of the summons and a copy of the aforesaid petition, filed an answer thereto with
denials, special and affirmative defenses and counterclaim. Thereafter, a hearing was held on the
application for preliminary mandatory injunction and/or receivership, after which respondent Judge
issued an order for a writ of preliminary mandatory injunction authorizing respondent Jureidini and
Tsuchiya to manage the corporation's hotel and restaurant, upon the filing of a bond in the amount of
P30,000.00. Then through another counsel Atty. Eriberto D. Ignacio in collaboration with their
counsel of record, Atty. Marcelino A. Bueno, petitioners (respondents therein) filed a motion to
dismiss the petition on the ground that respondent Judge has no jurisdiction to entertain the case,
while through Atty. Bueno, they filed a motion for reconsideration of the Order granting the issuance
of a writ of mandatory preliminary injunction. Private respondents filed their opposition to both
motions and on July 24, 1981, respondent Judge issued an Order denying both the motion for
reconsideration and the motion to dismiss the petition but increased the amount of the bond from
P30,000.00 to P120,000.00 to sufficiently protect the interests of herein petitioners. (Rollo, p. 81).

Hence, this petition.

After filing the petition, Atty. Eriberto D. Ignacio withdrew as counsel for petitioners on August 6,
1981. Such withdrawal was confirmed by petitioner Isamu Akasako (Rollo, p. 83). On August 10,
1981 the appearance of Isaca & Espiritu Law Offices as counsel in substitution of former counsel
Attys. Marcelino A. Bueno and Eriberto D. Ignacio was received by this Court. (Rollo, p. 84); all of
which were noted in the resolution of the First Division of this Court dated August 17, 1981. (Rollo, p.
160).

The new counsel filed a Manifestation and Motion praying that the therein attached Supplement and
certified copies of the questioned orders and writs be admitted and considered as part of petitioners'
original petition for certiorari and Prohibition with Preliminary injunction. (Rollo, pp. 85-131). On
August 14, 1981 petitioners filed an Urgent Motion for Restraining Order and Other Provisional
Injunctive Reliefs (Rollo, pp. 154-159). In the same resolution of August 17, 1981, after deliberating
on the petition and supplemental to the petition, the Court Resolved: (a) to require the respondents
to comment thereon (not to file a motion to dismiss within ten (10) days from notice and (b) upon
petitioners' filing of an injunction bond in the amount of P30,000.00 to issue a Writ of Preliminary
Injunction enjoining respondents from enforcing the writ of preliminary mandatory injunction dated
June 23, 1981 issued in Civil Case No. 132673. (Rollo, p. 160). Said bond was filed on August 20,
1981 (Rollo, p. 161) and accordingly, a writ of preliminary injunction was issued by this Court on
August 21, 1981 (Rollo, pp. 172-173).

Subsequently, petitioners filed a manifestation and urgent motion on August 28, 1981 praying that
private respondent Lourdes Jureidini and her counsel Atty. Arthur Canlas be declared in contempt of
court for the former's alleged defiant refusal: (a) to acknowledge receipt of the Writ of Preliminary
Injunction of August 21, 1981 and (b) to comply with the said writ issued by this Court. (Rollo, pp.
174-180).
Comment thereon was filed by private respondents through counsel (Rollo, pp. 185-199) in
compliance with the resolution of the First Division dated August 17, 1981 (Rollo, p. 160), praying for
the immediate lifting of the preliminary injunction. Said comment of private respondents was noted in
the resolution of October 5, 1981 (Rollo, p. 200) which also required respondents to comment on the
supplement to the petition.

On October 2, 1981, comment on the manifestation and urgent motion to declare Jureidini and her
counsel in contempt of court was filed by counsel for private respondent (Reno, pp. 201-214) in
compliance with the resolution of September 14, 1981 (Rollo, p. 181).

In the resolution of October 26, 1981 (Reno, p. 215) the Court Resolved to require petitioners to file
a reply to aforesaid comment. (Rollo, p. 215).

Meanwhile, supplemental comment on the supplement to the petition was filed by private
respondents on October 14, 1981 (Rollo, pp. 216-222) reiterating their stand that it is the ordinary
court and not the Securities and Exchange Commission (SEC) that has jurisdiction to entertain the
case as the controversies did not arise from the intra-corporate relationship among the parties.

On October 21, 1981, petitioner filed: (a) motion for leave to file reply to comment of respondents on
the petition and supplemental petition required in the resolution of August 17, 1981 (Rollo, pp. 223-
224) and (b) the attached Reply (Rollo, pp. 225-241). On November 25, 1981, petitioners filed their
Reply to respondents' Comment on petitioners' manifestation and urgent motion to declare them in
contempt. (Rollo, pp. 246-257).

On December 7, 1981 Atty. Bobby P. Yuseco entered his appearance as collaborating counsel for
petitioners (Rollo, p. 258) and filed an urgent petition for early resolution of petitioners' motion to hold
private respondents in contempt and for issuance of Order clarifying Writ of Injunction dated August
21, 1981. (Rollo, pp. 259-261).

In the resolution of January 18, 1982, this case and all pending incidents were set for hearing on
February 3, 1982. (Rollo, p. 268).

On February 1, 1982, Lesaca and Espiritu Law Offices filed a Manifestation and Motion for Leave to
withdraw as counsel for petitioners. (Rollo, pp. 274-275).

When this case was called for hearing on February 3, 1982, counsel for both parties appeared and
argued their causes and both were required by the Court within an unextendible period of ten (10)
days to file their respective memoranda in support of their positions on an pending incidents of the
case at bar while the hearing on the contempt proceedings was reset for February 10, 1982 where
the personal appearance of private respondent Lourdes Jureidini through her counsel was required.
(Rollo, p. 279).

On February 9, 1982, counsel for private respondent Jureidini filed an Urgent Motion and
Manifestation that he was informed by his client that she is physically exhausted and is beset with
hypertension and praying that she be excused from appearing at the hearing set for February 10,
1982, that the hearing be cancelled and the contempt incident be considered submitted for decision
on the basis of pleadings previously filed. (Rollo, pp. 280-282).

On the same date, February 9, 1982, counsel for petitioners filed his Memorandum in support of his
oral argument at the hearing of February 3, 1982, (Rollo, pp. 283-287) while a supplement thereto
was filed on February 12, 1982. (Rollo, pp. 291-294).
At the hearing of February 10, 1982, private respondent Lourdes Jureidini and her counsel failed to
appear. Accordingly the Court Resolved: (a) to IMPOSE on said counsel Atty. Canlas a fine of
P200.00 or to suffer imprisonment if said fine is not paid; (b) to RESET the hearing on the contempt
incidents on March 3, 1982 and (c) to REQUIRE the presence of Atty. Canlas and respondent
Lourdes Jureidini and of complainants Attys. Bibiano P. Lasaca, Rodolfo A. Espiritu and Renato T.
Paqui. (Resolution of February 10, 1982, Rollo, p. 290).

On February 15, 1982, private respondents file their memorandum in compliance with the resolution
of this Court of February 3, 1982 while petitioners on February 25, 1982 filed their reply thereto.

At the hearing of March 3, 1982, both counsel as well as private respondent Lourdes Jureidini, Attys.
Bibiano P. Lesaca, Rodolfo A. Espiritu and Renato R. Paguio appeared. Atty. Canlas, Lourdes
Jureidini, Atty. Lesaca and a representative of the petitioners were interpellated by the Court.
Thereafter, the incident was declared submitted for resolution. (Resolution of March 3, 1982, Rollo,
p. 316).

On March 5, 1982, counsel for private respondents filed his compliance with the resolution of
February 10, 1982 enclosing a check payable to this Court in the amount of P200.00 in payment of
the fine imposed with motion for reconsideration explaining why he should not be declared in
contempt and praying that the aforesaid resolution of February 10, 1982 be set aside, (Rollo, pp.
312-314). However, in the resolution of March 10, 1982, (Rollo, p. 317) the Court acting on the
compliance of Atty. Arthur Canlas with motion for reconsideration, denied the motion and required
the Chief of the Docket Division to return to Atty. Canlas the check in the amount of P200.00 it being
an out of town check, and Atty. Canlas to pay the fine in cash, and to show cause why he should not
be disciplinary dealt with or held in contempt for wilful delay in paying the fine by mail through an out
of town check contrary to his manifestation at the hearing that he had promptly paid the fine, both
within forty eight hours from notice.

Meanwhile, counsel for petitioners filed on April 6, 1982 an Urgent Petition for Permission to
Implement Injunction Writ issued on August 21, 1981 (Rollo, pp. 323-325) which was granted in the
resolution of May 26, 1982 (Rollo, p. 313). In the same resolution the Court ordered Lourdes
Jureidini and Milagros Tsuchiya to strictly and immediately comply with the Court's aforesaid writ of
preliminary injunction; indicated that it would resolve the pending incident for contempt against
private respondent Lourdes Jureidini when the Court decides the case on the merits; and gave the
parties thirty (30) days from notice within which to submit simultaneously their respective
memoranda on the merits of the case.

On May 31, 1982, counsel for private respondent Atty. Canlas filed in compliance with the resolution
of March 10, 1982, his explanation and manifestation why he should not be disciplinarily dealt with
and held in contempt of Court (Rollo, pp. 316-318). In the resolution of June 2, 1982, the Court
Resolved to set aside and lift the Order of Atty. Canlas' arrest and commitment it had issued on
March 31, 1982 but found the explanation and manifestation of Atty. Canlas dated May 29, 1982
unsatisfactory. In view thereof, he was reprimanded for negligence and undue delay in complying
with the Court's resolution. (Rollo, p. 319).

On June 18, 1982, counsel for petitioners allegedly for purposes of clarification as to the laws
involved in the matter of contempt of Lourdes Jureidini, filed a pleading entitled "Re Incident of
Contempt against Lourdes Jureidini." (Rollo, pp. 320-326) which was noted by the Court in the
resolution of July 7, 1982. (Rollo, p. 328).

Counsel for private respondents manifested (Rollo, p. 329), on July 12, 1982 that they are adopting
the memorandum submitted in the preliminary injunction incident as their memorandum in the main
case. Said manifestation was noted in the resolution of July 26, 1982. (Rollo, p. 331). Counsel for
petitioners manifested (Rollo, p. 333) that they are adopting their memorandum in support of
argument last February 3, 1982 as their combined memoranda on the merits of the case. Said
manifestation was noted in the resolution of September 15, 1982. (Rollo, p. 334). In the resolution of
November 29, 1982, this case was transferred to the Second Division. (Rollo, p. 336).

In their petition and supplemental petition, petitioners raised the following issues:

THE RESPONDENT COURT OF FIRST INSTANCE HAS NO JURISDICTION

OVER THE PETITION FOR mandamus AND RECEIVERSHIP "AS WELL AS IN
PLACING THE CORPORATE ASSETS UNDER PROVISIONAL RECEIVERSHIP IN
THE GUISE OF A WRIT OF PRELIMINARY MANDATORY INJUNCTION.

II

EVEN FALSELY ASSUMING THAT THE RESPONDENT COURT HAD

JURISDICTION, THE PRIVATE RESPONDENTS' PRINCIPAL ACTION OF
mandamus IS AN IMPROPER COURSE OF ACTION.

III

ASSUMING ARGUENDO THAT WHAT THE RESPONDENT COURT FOUND IS

TRUE, NAMELY THAT PRIVATE RESPONDENTS "ARE OUTSIDERS" AND "NOT
YET STOCKHOLDERS," THUS, HAVING NO PERSONALLY AT ALL, THEN
PROVISIONAL RECEIVERSHIP, ALBEIT CLOTHED AS A "WRIT OF
PRELIMINARY MANDATORY INJUNCTION" WAS ILLEGALLY ISSUED DE
HORS ITS JURISDICTION.

IV

ASSUMING ARGUENDO THAT THE RESPONDENT COURT HAD JURISDICTION

OVER BOTH THE PETITION FOR mandamus AS WELL AS THE PROVISIONAL
RECEIVERSHIP STILL THE RESPONDENT COURT ACTED IN EXCESS OF ITS
JURISDICTION OR IN GRAVE ABUSE OF ITS DISCRETION TO GRANT
RECEIVERSHIP OVER THE MANAGEMENT OF THE CORPORATE BUSINESS
AND ASSETS WHICH NEVER WAS NOR IS A SUBJECT MATTER OF
LITIGATION.

EVEN GRANTING FOR THE SAKE OF AGRGUMENT THAT THE RESPONDENT

COURT HAD JURISDICTION OVER THE SUBJECT MATTER OF THE CASE;
NONETHELESS IT WAS IN GRAVE ABUSE OF ITS DISCRETION TO
UNILATERALLY GRANT TO A "PARTY-IN-LITIGATION," THE PRIVATE
RESPONDENTS HEREIN, THE MANAGEMENT OF THE CORPORATE
BUSINESS. (Petition and Supplemental Petition; Rollo, pp. 2-18; 88-131).

I
The crucial issue in this case is whether it is the regular court or the Securities and Exchange
Commission that has jurisdiction over the present controversy.

Presidential Decree No. 902-A provides:

Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and
Exchange Commission over corporations, partnerships and other forms of
associations registered with it as expressly granted under existing laws and decrees,
it shall have original and exclusive jurisdiction to hear and decide cases involving

(a) ...

(b) Controversies arising out of intra-corporate or partnership relations and among

stockholders, members, or associates; between any or all of them and the
corporation, partnership or association of which they are stockholders, members, or
associates, respectively and between such corporations, partnership or association
and the State insofar as it concerns their individual franchise or right to exist as such
entity.

It has already been settled that an intracorporate controversy would call for the jurisdiction of the
Securities and Exchange Commission. (Philippine School of Business Administration v. Lanao, 127
SCRA 781, February 24, 1984). On the other hand, an intra-corporate controversy has been defined
as "one which arises between a stockholder and the corporate. There is no distinction, qualification,
nor any exemption whatsoever." (Philex Mining Corporation v. Reyes, 118 SCRA 605, November 19,
1982). This Court has also ruled that cases of private respondents who are not shareholders of the
corporation, cannot be a "controversy arising out of intracorporate or partnership relations between
and among stockholders, members or associates; between any or all of them and the corporation,
partnership or association, of which they are stockholders, members or associates, respectively."
(Sunset View Condominium Corporation v. Campos, Jr., 104 SCRA 303, April 27, 1981).

Under Batas Pambansa Blg. 68 otherwise known as "The Corporation Code of the Philippines,"
shares of stock are transferred as follows:

SEC. 63. Certificate of stock and transfer of shares. — The capital stock of stock
corporations shall be divided into shares for which certificates signed by the
president or vice-president, countersigned by the secretary or assistant secretary,
and sealed with the seal of the corporation shall be issued in accordance with the by-
laws. Shares of stock so issued are personal property and may be transferred by
delivery of the certificate or certificates indorsed by the owner or his attorney-in- fact
or other person legally authorized to make the transfer. No transfer, however, shall
be valid, except as between the parties, until the transfer is recorded in the book of
the corporation showing the names of the parties to the transaction, the date of the
transfer, the number of the certificate or certificates and the number of shares
transferred.

xxx xxx xxx

As confirmed by this Court, "shares of stock may be transferred by delivery to the transferee of the
certificate properly indorsed. 'Title may be vested in the transferee by delivery of the certificate with a
written assignment or indorsement thereof ' (18 C.J. S. 928). There should be compliance with the
mode of transfer prescribed by law (18 C.J.S. 930)' " (Nava v. Peers Marketing Corp. 74 SCRA 65,
69, Nov. 25, 1976)
As the bone of contention in this case, is the refusal of petitioner Rivera to indorse the shares of
stock in question and the refusal of the Corporation to register private respondents' shares in its
books, there is merit in the findings of the lower court that the present controversy is not an
intracorporate controversy; private respondents are not yet stockholders; they are only seeking to be
registered as stockholders because of an alleged sale of shares of stock to them. Therefore, as the
petition is filed by outsiders not yet members of the corporation, jurisdiction properly belongs to the
regular courts.

II

On the other hand, there is merit in petitioners' contention that private respondents' principal action
of mandamus is an improper course of action.

It is evident that mandamus wig not lie in the instant case where the shares of stock in question are
not even indorsed by the registered owner Rivera who is specifically resisting the registration thereof
in the books of the corporation. Under the above ruling, even the shares of stock which were
purchased by private respondents from the other incorporators cannot also be the subject of
mandamus on the strength of mere indorsement of the supposed owners of said shares in the
absence of express instructions from them. The rights of the parties will have to be threshed out in
an ordinary action.

III-V

Petitioners insist that what was issued was a provisional receivership, while private respondents
maintain that the trial court issued a Writ of Preliminary Mandatory Injunction. Be that as it may, it
appears obvious that from the abovementioned rulings of this Court, petitioners' contention that
respondent Judge in the issuance thereof committed acts of grave abuse of discretion, is well taken.

In the Order dated June 5, 1981, in Civil Case No. 132673, the basis of aforesaid Writ was as
follows:

Finally, the Court, after assessing the evidence, finds that the issuance of a
preliminary mandatory injunction is proper. Respondents Isamu Akasako and
Aquilino Rivera, thru their simulated relationship, have succeeded for two years since
1979 to deprive the petitioners to participate in the profit and management of the
corporation of which they are the majority stockholders considering that the stocks
certificates appearing in the name of Aquilino Rivera (Exh. "8") is 55% to 75% of the
total stocks of the corporation by Isamu Akasako would only prolong the injustice
committed against the petitioners and the damages they would suffer would be
irreparable. The Court is aware that preliminary mandatory injunction is the exception
rather than the rule, but according to the Code Commission, in its report on page 98,
"the writ of preliminary mandatory injunction is called for by the fact that there are at
present prolonged litigation between owner and usurper and the former is deprived of
his possession even when he has an immediate right thereto." In the instant case,
the right of the petitioners is clear and unmistakable on the law and the facts and
there exists an urgent and paramount necessity for the issuing of the writ in order to
prevent extreme or rather serious damage which ensues from withholding it. (43
C.J.S. 413)

WHEREFORE, in view of the foregoing circumstances, let a writ of preliminary

mandatory injunction issue requiring respondents to allow petitioners to manage the
 corporate property known as the Fujiyama Hotel & Restauarant, Inc. upon
petitioners' filing of a bond in the amount of P30,000.00.

A mandatory injunction is granted only on a showing (a) that the invasion of the right is material and
substantial; (b) the right of complainant is clear and unmistakable; and (c) there is an urgent and
permanent necessity for the writ to prevent serious damage. (Pelejo v. Court of Appeals, 117 SCRA
668, Oct. 18, 1982).

A mandatory injunction which commands the performance of some specific act is regarded as of a
more serious nature than a mere prohibitive injunction, the latter being intended generally to
maintain the status quo only. While our courts, being both of law and equity, have jurisdiction to
issue a mandatory writ, it has always been held that its issuance would be justified only in clear
cases; that it is generally improper to issue it before final hearing because it tends to do more than
maintain the status quo; that it should be issued only where there is a willful and unlawful invasion of
plaintiff's right and that the latter's case is one free from doubt and dispute. (National Marketing v.
Cloribel, 22 SCRA 1038, March 13, 1968).

Respondent court in the instant case violated the fundamental rule of injunctions that a mandatory
injunction will not issue in favor of a party whose rights are not clear and free of doubt or as yet
undetermined. (Namarco v. Cloribel, 22 SCRA 1038-1039, March 13, 1968). It will be recalled that
the disputed shares of stock were purchased not from the registered owner but from a Japanese
national who allegedly was the real owner thereof. It was also alleged that the registered owner was
only a dummy of Akasako. it is also true that the trial court has already made findings to that effect at
the hearing for the issuance of the Order of June 5, 1981. Nonetheless, these are contentious issues
that should properly be ventilated at the trial on the merits. As correctly stated in petitioners' motion
for reconsideration, the Order of the trial court is in effect a judgment on the merits, declaring
expressly or impliedly that petitioners are stockholders of the Corporation at the hearing of only the
incident for the issuance of a Writ of Preliminary Injunction. On the other hand if the Order amounts
to a judgment on the merits, the lower court should first rule on what private respondents seek, the
registration of their shareholdings in the books of the corporation and the issuance of new stock
certificates. It is only thereafter that the subsequent act of management may be ordered and the
period of finality of such a judgment should be in accordance with the Rules of Court, giving the
respondents the right to an appeal or review and not be immediately executory as the Writ of
Preliminary Mandatory Injunction would infer. (Rollo, p. 65).

Another fundamental rule which appears to have been violated in the case at bar is that no
advantage may be given to one to the prejudice of the other, a court should not by means of a
preliminary injunction transfer the property in litigation from the possession of one party to another
where the legal title is in dispute and the party having possession asserts ownership thereto.
(Rodulfo v. Alonso, 76 Phil. 225), February 28, 1946). Similarly, the primary purpose of an injunction
is to preserve the status quo, that is the last actual peaceable uncontested status which preceded
the controversy. In the instant case, petitioner Rivera is the registered majority and controlling
stockholder of the corporation before the ensuing events transpired. By the issuance of the Writ in
question he appears to have been deprived of his rights as stockholder thereof apart from his status
as Chairman of the Board and President of the corporation, with Akasako as the Manager of the two
restaurants in this case; the same being the last uncontested status which preceded the controversy.
(Rollo, p. 127).

On the contempt incident involving private respondent Lourdes Jureidini, a Manifestation and Urgent
Motion was filed by petitioners to declare her in contempt of Court for allegedly refusing to
acknowledge receipt of the Writ of Preliminary Injunction issued by this Court and for allegedly
refusing to comply therewith. Attributed to her were the following statements: "I will not obey that ...
Yes, I am higher than the Supreme Court ... I will obey only what my lawyer tells me."

In her explanation however, filed through her counsel she denied having uttered the statements
alluded to her, the truth of the matter being that she was alone in the restaurant when this Court's
process server, accompanied by petitioners' lawyers, approached her and demanded that she
vacate the premises and surrender the management of the Restaurant. Fazed by the unusual
display of lawyers she requested that she be given time to confer with her counsel Said request
allegedly precipitated the remark from Petitioners' counsel that neither respondent herself, nor her
counsel can be higher than the Supreme Court and that any conference seeking to clarify the effect
of the Writ of Preliminary Injunction would be futile. (Rollo, pp. 174-175).

It was likewise explained that respondent Jureidini did not sign and acknowledge receipt of the Writ
because it was not addressed to her but to the lower court and to her counsel.

Respondent's counsel says that the incident was concocted and devised by the petitioners and their
counsel to serve no salutary purpose but to scare and harass respondent Jureidini. He also stated
that "it is equally improper, at least in practice, for lawyers to accompany officers of the Court in
serving or otherwise executing processes of said court as to create a seeming suspicion to the
public that lawyers are not involved only professionally in the case they handle but signify their
personal interests as well." (Rollo, pp. 208-209).

When this contempt incident was heard on March 3, 1982, Atty. Arthur A. Canlas, counsel for private
respondent Lourdes Jureidini, Jureidini herself, Atty. Bibiano P. Lesaca a representative of the
petitioners were interpellated by the Court. Thereafter, the incident was declared submitted for
resolution. (Resolution of March 3, 1982; Rollo, p. 316).

Thereafter, counsel for petitioner filed a pleading "The Incident of Contempt of Lourdes Jureidini" in
the form of a summation of the incident and reiteration of petitioners' charges of contempt.

Counsel for petitioner invokes the provisions of: Section 3, Rule 71 on Indirect Contempt and par. (b)
thereof, on Disobedience of or Resistance to a Lawful Writ, Process, Order, Judgement or
Command of a Court; or Injunction granted by a Court or Judge ... ; (2) Section 6, Rule 71 regarding
punishment or penalty thereof and (3) Section 5, Rule 135, par. (e) to compel obedience to its
judgments, orders and processes, and to the lawful orders of a judge out of Court, in a case pending
therein.

On the incident itself, petitioners' counsel stressed that present when the writ was served were
attorneys for petitioners Bibiano P. Lesaca, and Renato P. Paguio in the company of petitioners
Isamu Akasako, Akasako's assistants Furnio, Fujihara and Isamu Tajewakai and this Court's
process server, before whose presence the alleged contemptuous acts were committed.

Counsel for petitioners also reminded the Court that the first summons of the Court were answered
only by counsel for private respondent Jureidini while the latter feigned sickness without a medical
certificate. The hearing for the contempt charge was reset but neither counsel for private respondent
nor the latter appeared for which non-appearance Atty. Canlas was fined P200.00 for contempt
when finally both counsel and client appeared on the third day, the hearing was set.

At that hearing, counsel for petitioners narrated that Attys. Lesaca and Paguio and two Japanese
nationals testified in unison that Lourdes Jureidini not only disregarded the writ but distinctly uttered
the complained of statements.
Petitioners' counsel laid emphasis on the fact that Lourdes Jureidini is a graduate of nursing, who
speaks in straight polished English, capable of understanding the Writ of Mandatory Injunction of the
Respondent Court served on petitioners by herself and a Deputy Sheriff of Manila, but incredibly
unable to understand the Writ issued by the Supreme Court. She was assessed as "overbearing to
the point of insolence" and capable of uttering "I am higher than the Supreme Court."

There is no question that disobedience or resistance to a lawful writ, process, order, judgment or
command of a court, or injunction granted by a court or judge, more particularly in this case, the
Supreme Court, constitutes Indirect Contempt punishable under Rule 71 of the Rules of Court. (Rule
71, Section 3(b) and Section 6).

It has been held that contempt of court is a defiance of the authority, justice or dignity of the court,
such conduct as tends to bring the authority and administration of the law into disrespect or to
interfere with or prejudice parties litigant or their witnesses during litigation. It is defined as a
disobedience to the court by setting up an opposition to its authority justice and dignity. It signifies
not only a willful disregard or disobedience of the court's orders but such conduct as tends to bring
the authority of the court and the administration of law into disrepute or in some manner to impede
the due administration of justice (Halili v. Court of Industrial Relations, 136 SCRA 135, April 30,
1985).

However, it is also well settled that "the power to punish for contempt of court should be exercised
on the preservative and not on the vindictive principle. Only occasionally should the court invoke its
inherent power in order to retain that respect without which the administration of justice must falter or
fail." (Villavicencio v. Lukban, 39 Phil. 778 [1919]; Gamboa v. Teodoro, et al., 91 Phil. 274 [1952];
Sulit v. Tiangco, 115 SCRA 207 [1982]; Lipata v. Tutaan, 124 SCRA 880 [1983]). "Only in cases of
clear and contumacious refusal to obey should the power be exercised. A bona
fide misunderstanding of the terms of the order or of the procedural rules should not immediately
cause the institution of contempt proceedings." "Such power 'being drastic and extra-ordinary in its
nature ... should not be resorted to ... unless necessary in the interest of justice.' " (Gamboa v.
Teodoro, et al., supra).

In the case at bar, although private respondent Jureidini did not immediately comply with the Writ of
Injunction issued by this Court, it appears reasonable on her part to request that she be allowed to
confer with her lawyer first before she makes any move of her own. It is likewise reasonable for
counsel for private respondent to request that he be given time to file a motion for clarification with
the Supreme Court.

It will also be noted that the testimonies produced at the hearing to establish the fact that she had
uttered the alleged contemptuous statements alluded to her were those of Attys. Lesaca and Paguio
and two Japanese nationals, a one-sided version for the petitioners.

It appears to Us that the version of counsel for private respondent is more in accord with human
experience: Jureidini who was alone in the Restaurant was fazed by the unusual display of might
and by the presence of lawyers demanding that she vacate premises and surrender the
management of the Restaurant (Rollo, p. 204), this is more believable than the version of counsel for
petitioners who summed her up as a person "overbearing to the point of insolence" and capable of
uttering" I am higher than the Supreme Court." It would therefore be more reasonable to believe that
what she uttered in that situation where she felt threatened, was more in self-defense and not an
open defiance of the Supreme Court.

Jureidini cannot also be faulted for finding it difficult to understand the writ issued against her by the
Supreme Court as she believed that not only have she and her correspondent the legal right to
manage the restaurant but the equitable right as well, having been placed in possession of the
corporate property only after posting a bond of P120,000.00. (Rollo, pp. 197-198).

In connection with this incident, Jureidini through her counsel filed her comment on October 2, 1981
(Rollo, p. 201) contrary to the allegation of petitioners' counsel that it was only Atty. Canlas who filed
his comment.

WHEREFORE, the assailed orders of respondent Judge are SET ASIDE; the complaint (special civil
action for mandamus with damages, etc.) should ordinarily be dismissed without prejudice to the
filing of the proper action; but as all parties are already duly represented, We hereby consider the
case as an ordinary civil action for specific performance, and the case is therefore remanded to the
lower court for trial on the merits; the charge of contempt against respondent Jureidini is
DISMISSED but the order of Our Court restraining respondent from taking over the management of
the restaurant remains until after this case is decided.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 87647 May 21, 1990
TOMAS T. REYES, petitioner,
vs.
COURT OF APPEALS and SUN INSURANCE OFFICE, LTD., respondents.
Diores, Diores & Diores Law Offices for petitioner.
Alfonso Felix, Jr. for private respondent.

REGALADO, J.:
The instant petition raises the issue as to whether or not, under the doctrine of res adjudicata, a prior grant of a writ of preliminary injunction
operates as a bar to another application by the same party for a second writ in another proceeding over the same subject matter.
The chronological background of this case, as alleged in private respondent's original petition for
certiorari and prohibition filed in CA-G.R. SP No. 16415, and quoted by respondent court in its
decision of March 6, 1989, is in substance as follows:
1. August, 1979—Sun Insurance Office, Ltd. (Sun) designated Luis A. Reyes of LAR
Insurance Agency as a General Agent.
2. October, 1979—Luis A. Reyes appointed his son, Tomas T. Reyes, as his
attorney-in-fact to manage LAR Insurance Agency.
3. March 6, 1980—Tomas Reyes and his wife executed a deed of mortgage in favor
of United Coconut Planters Bank (UPCB) covering 3 parcels of land evidenced by
TCT 918, TCT (25021)-7125 and TCT 189 to guarantee a loan of P147,000.00. The
mortgage was later subject to an additional credit agreement in the amount of
P80,000.00.
4. LAR Agency later allegedly incurred an accountability in favor of Sun in the
amount of P800,000.00.
5. Tomas T. Reyes, with the consent of Sun, assumed the P800,000.00 obligation,
subject to reconciliation of records and verification of accounts.
6. June l2, 1985—A compromise agreement was entered into by and between
Tomas T. Reyes and Sun in connection with the assumption of the obligations of
LAR Payment by Tomas Reyes was to be affected with Sun retaining and
withholding 50% of all commissions earned, plus P7,500.00 a month.
7. August, 1985—Tomas T. Reyes, upon the insistence of Sun, executed a deed of
second/third mortgage but only on one property covered by TCT No. 189 in favor of
Sun.
8. March 3l, 1986—UCPB executed a deed of assignment of the Reyes mortgages of
March 6, 1980 in favor of Sun. Later, Sun paid UCPB the amount of P67,415.43, the
balance remaining of the obligation at this point in time. With the payment, Sun
claims there was subrogation in that it "stepped into the shoes" of UCPB.
9. July l4, 1986— Sun filed an application for extrajudicial foreclosure alleging default
on the part of Tomas Reyes.
10. July 22, 1986— Judge Juan Reyes, presiding judge of Branch 14, issued a
restraining order enjoining temporarily the extrajudicial foreclosure.
11. October 7, 1986—Another application for extra-judicial foreclosure was made by
Sun.
12. November 13, 1986—The 3 properties subject of the UCPB mortgage were sold
at public auction. Sun was the sole bidder.
13. November 25, 1986— Sun filed an ex parte petition with the Mandaue court for
the issuance of a writ of possession.
14. December 9, 1986—The Mandaue court issued an order granting the petition
upon filing of a bond in the amount of P33,000.00.
 15. January 29, 1987—The Mandaue court issued the writ of possession to
dispossess Tomas T. Reyes of the properties in question.
16. February 12, 1987 to February 16, 1987—This period was given by Executing
Sheriff Librado M. Buendia to Tomas T. Reyes to voluntarily vacate the premises.
17. February 20, l987—In the early morning hours, the sheriffs with military
personnel went to the premises in question and threatened to eject the Reyes family
and literally to "throw them into the streets" per order of Sun. The sheriffs and
company stayed at the premises the whole day.
18. February 20, l987, 2:40 P.M.— Tomas T. Reyes filed an "Urgent Ex-Parte Motion
to Withhold Implementation of Writ of Possession."
19. February 20, 1987—The Mandaue court issued an order that for "humanitarian
reasons" implementation of the writ of possession shall be extended to February 25,
1987.
20. February 23, 1987, 1:45 P.M.—Tomas T. Reyes filed a petition for Annulment of
Deed of Assignment and Extrajudicial Sale of Real Properties and Damages with
Application for Writ of Preliminary Injunction."
21. February 23, 1987, 2:00 P.M.—Tomas T. Reyes filed an urgent motion for
issuance of a restraining order.
22. February 24, 1987, 9:00 A.M.—The urgent motion was set and heard by the
Honorable Julio Logarta.
23. February 27, 1987—Judge Julio Logarta issued a restraining order.
24. April 29, 1987—Judge Julio Logarta, after due and proper notice and hearing
issued a writ of preliminary injunction.
25. July 13, 1987—Sun filed a petition for writ of certiorari and mandamus with
prayer for the issuance of a restraining order, praying, among others, for the
annulment of the orders of February 27, 1987 and April 29, 1987 of Judge Julio
Logarta.
26. September 30, 1987—The aforesaid case was heard on oral arguments before
the Intermediate Appellate Court.
27. October 6, 1987—The Intermediate Appellate Court rendered judgment,
dismissing Sun's petition for certiorari and declaring that Sun, being a foreign
corporation, cannot bid in the extrajudicial foreclosure sale.
28. Subsequent thereto, petitioner filed another petition for extrajudicial foreclosure
before RTC, Branch 28, Mandaue City, with the Hon. Generoso Juaban as acting
presiding judge.
29. December 4, 1987—Upon application of petitioner Tomas Reyes, a temporary
restraining order was issued by the Hon. Judge Generoso Juaban enjoining the
auction sale set on December 7, 1987.
30. December 18, 1987—After due and proper notice and hearing, a writ of
preliminary injunction was issued by aforesaid judge enjoining defendants from
foreclosing plaintiffs property pending litigation.
31. A motion for reconsideration was filed by petitioner which was denied by the new
presiding judge, Hon. Mercedes Gozo-Dadole.
32. Petitioner thereafter filed another petition for certiorari and prohibition before the
Court of Appeals. 
1

In its decision in the aforesaid second petition,   respondent Court of Appeals, applying the rule
2

on res judicata, held that petitioner herein having previously sought a preliminary injunction from the
trial court on the sole ground that an alien corporation could not bid for private land or purchase the
same at foreclosure, he cannot now avail himself of another writ of preliminary injunction on grounds
other than that expressly invoked and considered in the first application.
It further held that petitioner could have raised the issue of the validity of the deed of mortgage, deed
of assignment and compromise agreement, on which he bases his second bid for injunctive relief,
during the hearing held by the trial court on March 4, 1987 in connection with the application for the
 first writ of preliminary injunction. It pointed out that the order for the issuance of said writ thereafter
issued on April 29,1987 was in effect a judgment by consent, both parties having offered arguments
in support of their respective positions and stipulated that they submit the question of propriety of the
issuance of preliminary injunction only on the ground of said constitutional issue.
Judgment was consequently rendered by respondent court setting aside the orders of the court a
quo dated December 18, 1987 and November 11, 1988 and restraining said lower court from
conducting further proceedings in Civil Case No. MAN-287, except to dismiss the same.   This 3

impelled the filing of the petition now before us.

Petitioner submits that the principle of res judicata has no room for application in the case at bar.
This, so he claims, is because the second application for preliminary injunction is separate, distinct
and premised on a set of facts entirely different from those involved in the first application, hence the
issues raised in his second application allegedly could not have been raised in the first.
He points out that in his first application for injunction, the mortgage had not only been foreclosed,
but his properties subject of the mortgage were already purchased by private respondent in the
foreclosure sale. A writ of possession had already been issued to respondent, a foreign corporation.
Understandably, petitioner avers, the only issue that could be raised then was respondent's capacity
to own and hold real properties which would be determinative of the validity of the foreclosure sale in
its favor and the propriety of the writ of possession obtained by it.
On the other hand, petitioner contends that his subsequent application for injunction, which
eventuated in the petition at bar, proceeded from a different factual setting. After private respondent
was declared disqualified to acquire real properties in CA-G.R. SP No. 12339, it being a foreign
corporation, it filed a new petition for extrajudicial foreclosure, apparently on the theory that it can
foreclose, although it cannot bid in the foreclosure sale. This then created the exigent necessity for
judicial adjudication of the issues on the infirmities and legal defects of the deeds of mortgage,
assignment and other documents subject of the aforementioned Civil Case No. MAN-287, and to
also seek injunctive relief pending the resolution of said issues. 
4

The petition bears the imprint of merit and warrants the issuance of the corrective writ of certiorari.
A second application for injunction, which rests in the sound discretion of the court, will ordinarily be
denied unless it is based on facts unknown at the time of the first application.   Stated otherwise, the
5

renewal of a motion for an interlocutory injunction on grounds or on evidence which should have
been presented on the first application is discouraged, unless complainant presents new and
additional matter discovered since the former hearing and shows that such new grounds or matter
was not reasonably discoverable at the time of the first application.  6

The aforesaid jurisprudential rule, which is not absolute, is not based on the principle of res
judicata. The latter principle requires, inter alia, a former final judgment or order which has not only
become final but must have been a judgment which disposed of the case on the merits. These
requisites do not obtain in a proceeding for a writ of preliminary injunction which merely constitutes
an ancillary remedy and results in a provisional relief, not a final judgment or order arrived at after
trial of the main case. In fact, we have held that courts should avoid issuing a writ of preliminary
injunction which, in effect, would dispose of the main case without trial.  7

Obviously, the rationale for the aforesaid jurisprudential rule in American case law, just as it is in our
jurisdiction, is the same as the interdiction in procedural laws on splitting a single cause of action
while providing for permissive joinder of causes of action, both intended to avoid multiplicity of suits
and vexation or harassment to a party.
But, just like said adjective laws, the aforesaid decisional rule also has its ratifications Although a
second application for injunction ought to be denied if it is based on facts actually known at the time
of the first application, this rule applies only where the second application is to operate on the same
act sought to be enjoined in the first application, and cannot be invoked where relief is asked against
a different act. 
8

In the case at bar, although the grounds relied upon by petitioner in his second application for
injunction existed even during his first application, this would not argue against the present injunctive
relief in question as the two writs are directed against distinct acts. The first injunction was against
the implementation of the writ of possession consequent to the invalidity of the sale of the foreclosed
 property to a disqualified foreign corporation; the second is against the new foreclosure proceeding
subsequently instituted by private respondent after respondent court held that it was prohibited by
law from bidding or in any manner taking part in the prior foreclosure sale.
Indeed, as earlier noted, petitioner correctly argued that the alleged nullity of the deed of mortgage,
deed of assignment and compromise agreement raised in issue in Civil Case No. MAN-287 could
not have been ventilated in the controversy over the issuance of the writ of possession which was
merely part of the executory process consequent to a concluded extrajudicial foreclosure proceeding
and consummated foreclosure sale. In the said incident, therefore, what petitioner sought to enjoin
was not the consummated foreclosure and sale but the implementation of the writ of possession
issued in connection therewith. The issue was, therefore, properly confined to private respondent's
capacity to own and hold real properties, which was being challenged and sought to be enjoined,
while the issues on the nullity of the documents hereinbefore mentioned had perforce to be taken up
in the proper proceeding specifically instituted for that purpose, that is, Civil Case No. MAN-287 of
the Regional Trial Court, Branch 28, Mandaue City.
Notably, the alleged legal infirmities and defects of the deed of mortgage, deed of assignment and
compromise agreement are sufficiently averred in petitioner's amended complaint filed in the
aforesaid case with the court a quo.   We also take note of the hearing conducted by respondent
9

court in CA-G.R. SP No. 12339, the petition initiated therein by private respondent against the first
writ of preliminary injunction, which discloses that petitioner never abandoned nor did he have the
intention to abandon his theory of the alleged nullity of the aforementioned documents, to wit:
JUSTICE MENDOZA:
Is that the only ground why you are questioning the extrajudicial sale, the fact that
the petitioner cannot own properties in the Philippines, or are there other grounds in
the lower court?
ATTY. DIORES
There are other grounds, Your Honor, that we have stated which are now the subject
of the case in the Regional Trial Court.
10

In the last analysis, it was private respondent's misapprehension of the scope and the legal
consequences of respondent court's decision in CA- G.R. SP No. 12339, prohibiting and nullifying its
participation in the foreclosure sale, which spelled complications for it in the present case.
Respondent court's court aforesaid decision in effect, only annulled the writ of possession and the
auction sale where private respondent was the sole bidder. However, since private respondent opted
to file a new petition for extrajudicial foreclosure and since the bases for said second petition for
foreclosure have been challenged and put in issue in Civil Case No. MAN-287 of the Regional Trial
Court, Branch 28, Mandaue City, filed by petitioner prior thereto, or on February 23, 1987, the right
of private respondent to foreclose has been thrown open for determination on the meats, and
injunctive relief lies pending such final adjudication.
ACCORDINGLY, the instant petition is hereby GRANTED and the decision of respondent Court of
Appeals, dated March 6, 1989 is hereby REVERSED and SET ASIDE. The presiding judge of the
Regional Trial Court, Branch 28, Mandaue City, or to whomsoever Civil Case No. MAN-287 is
assigned, is directed to hear and decide the same with deliberate dispatch. The temporary
restraining order issued in this case on April 13, 1989 is hereby made permanent.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-13316       December 11, 1917

L. J. MADARANG, ET AL., petitioners,
vs.
FRANCISCO SANTAMARIA, judge of first instance of Ilocos Sur, and DIONISIO ABAYA, ET
AL., respondents.

The petitioners in their own behalf.

No appearance for respondents.

JOHNSON, J.:

This was an original action commenced in the Supreme Court. It was entitled "United States,
petitioner, vs. The Court of First Instance et al., respondents." It was a civil action and should not
have been entitled as thus indicated. From a reading of the petition, however, it appears that it was
an action by the said Madarang et al. vs. The Judge of the Court of First Instance et al. It was an
original action for the writ of injunction. The prayer was, first, for a preliminary injunction, and
second, for a perpetual injunction. The prayer of the petition is as follows:

For the aforementioned considerations, the petitioner prays that this Supreme Court issue a
writ of preliminary injunction against the respondents and that after the necessary legal
proceedings it render decision against them, issuing a perpetual injunction for the same
purpose, and staying the respondents from disturbing the rights and properties involved in
these proceedings, sentencing them besides to pay the amount of P40,000 as damages,
and the costs of these proceedings.

We have frequently held, is accordance with the provisions of section 17 of Act No. 136, that the
Supreme Court does not have original jurisdiction, in an action brought for the purpose, to grant a
remedy by injunction. Said section provides that the Supreme Court shall have original jurisdiction to
issue writs of mandamus, certiorari, prohibition, habeas corpus, and quo warranto. No provision is
made for the granting of the writ of injunction as an original action in the Supreme Court.

An application for preliminary injunction will be denied by the Supreme Court unless the same is
petitioned for in connection with some other remedy or in an action actually pending in that court.
(Diokno vs. Reyes, 7 Phil. Rep., 385; Garcia Gavieres vs. Robinson, 8 Phil. Rep., 332; International
Banking Corporation vs. De Leon, R. G. No. 2843, Nov. 15, 1905, not published.)

For the foregoing reasons, therefore, the petition is hereby denied, with costs. So ordered. lawphi1